How $100m tentpoles make money!

$100m+ budget movies are known as tentpoles for a simple reason: no company can afford too many consecutive flops at this level.

So why, as Elberse argues they all should, do the big 5 all focus on tentpole or (as Elberse calls them) blockbuster productions?

Remember too that the prints & marketing spend is typically about the same as the production budget which is why, with cinema's cut factored in, box office needs to hit triple the production budget to start making money!!

This excellent stephenfellows feature breaks it down.

So - the true costs of a $100m tentpole actually go MUCH higher.

How on earth do they make money then?!

Well, these days they have a wide range of revenue sources and distribution/exchange outlets.

DISNEY China, convergence and franchising exemplified

UPDATE...

China had 4 of 2019's top 20 WORLDWIDE films. In September 2020 it was easily the world's biggest cinema market with the US covid-hit. Read an excellent analysis here.

As of the end of 2019, China now has 69,787 cinema screens, up 9,708 from 2018, according to the Communist party mouthpiece the People’s Daily, which added that more than 1.7 billion tickets were sold. The propagandistic publication went so far as to deem the current moment a “golden age” for the Chinese film industry’s development, as “the market bubble fades… and Chinese films continue to steadily improve.” (Variety: China’s Box Office Hit New Heights in 2019, as Hollywood’s Share Shrank. Good detail on how the Chinese market is shifting towards homegrown hits)

FURTHER UPDATES: Barr condemns Disney and Hollywood for 'kowtowing' to China.

Mulan shows how far Disney will go, self-censor, to maximise the Chinese market (Guardian).

Disney is so damned big it even owns one of its main TV subscription rivals, Hulu. The mighty mouse movie company now gets 50% of its revenues from its multiple theme parks, but is also as much a TV company as it is a film company - from its subsidiaries like ESPN (sports channel) to zeitgeisty series making baby Yoda a global phenomenon, there's more to Disney than movies.

It's buying spree was seen as crazy by some - but bear in mind that Marvel cost them $4bn ... and the last Avengers movie alone raked in $3bn from the box office, never mind its value in driving $5.99/month subscribers to Disney+.

It's even managed to get back into China, having been banned for years because of pro-Tibet movies it now has a Shanghai Disneyland (but it's 57% owned by the Chinese government!) and since 2016 it has been getting movies distributed there again. Their Mulan remake has changed a lot of aspects to avoid upsetting the Chinese government!

This article ends on an intriguing notion - because their stock market value has dropped by over $80bn since the coronavirus hit (a third of their value) ... could Apple sweep in to buy this giant???

Taking the Mickey: how Disney swallowed up all of culture.

Statista.com breakdown of China's surging global share

UNIVERSAL tentpole franchise kings hiking ahead

ScreenDaily reports on the huge turnaround, after a poor 2014

IN THIS POST: Analysis of how Universal's shifting strategy impacts on WT; an outline of what this strategy is, with key figures; details of how the new horror universe was proposed in 2014, and how its taking shape in 2016; the Battlestar Galactica bid to take on Star Wars.

Working Title's conglomerate parent, NBC-Universal, clearly knew what it was doing in downgrading its subsidiary's relationship to 'first look' status*; NBC-U would have first refusal over any new WT production, but had no obligation to pick it up for distribution or to fund production proposals. WT have to find their own financing now, even if that still often means pre-signing distribution deals with StudioCanal or UIP, all part of the NBC-U (and Comcast) conglomerate. Gone are the days of massive block funding for WT.

*See this post for details on the new deal (and a definition of first look), signed in 2012 and due to run out in 2015; no news yet of any changes

This shift in approach, which may seem surprising given how successful WT have been, reflects a hardening of Universal's commitment to the tentpole strategy, and the franchising that largely underpins this. Anita Elberse, who uses the term 'blockbuster' in her book, would approve: she argues that this is the only viable approach for any major player in any entertainment industry (she also considers football and music among other industries - a very interesting, digestible read, I recommend it).

1 in 5 homes with cinema room by 2020?

This previous post looked at NBC-Universal's $35k home rental scheme, very relevant to the theme below...

According to a recent survey, a fifth of Britons aim to have a dedicated cinema room by 2020 ... and 8% already do! The rise of home cinema has long been noted, but this is a step beyond having a large screen TV in the living room, being something closer to the setup seen in The Sopranos, the classic HBO series, where mafia don Tony brings round his cronies to sit in comfort and watch DVDs of such gangster flicks as The Public Enemy.

The rise of cinemas such as Leeds' Everyman, with its large sofa seating and tables for drinks and food (with the food menu going well beyond popcorn, and premium beer/drinks available), indicate one means by which the cinema industry is attempting to fight back against the increasing numbers staying at home for their cinema experience. Everyman's pricing strategy also quite purposefully tries to exclude many of the teens who effectively ruin the cinema experience for adults.

The site I read the home cinema stat on was pushing a new concept, the rise of corner shops and off-licenses as the replacement for dedicated video rental stores, with the demise of Blockbuster the most visible sign of their disappearance from the high street, with pressure from Netflix and other streaming services, piracy and supermarket sales all proving terminal.

The article specifically cites 'automated kiosks' - have any of you ever encountered one of these? Clearly yet another means by which digitisation is opening up further possibilities for distribution.

In 2013 70% of TV sets sold in the UK were classified as big – 26in-32in – and nearly 16% were were “jumbo” – 43in or bigger. This is up 4% from the year before, according to TV Licensing’s annual Telescope report on the nation’s viewing habits.An earlier report found that 8% of Brits expect to have a dedicated cinema room in their homes by 2020.With staying in firmly established as the new going out, and consumers abandoning FOMO, the fear of missing out, in favour of JOMO, the joy of missing out, there’s never been a better time to cash in on the sales opportunity offered by big nights in, and this year OLN is looking at how to host and sell the perfect movie night.As more and more traditional video and DVD rental shops have gone out of business in the face of competition from postal and on- demand services such as Amazon Prime and Netflix – giant Blockbuster went into administration late last year – some off-licences have stepped into the gap, offering customers DVDs for rent or sale.Automated video kiosks such as those offered by Original Video (original-video.com) have taken off in the US, where they first launched in 2002 and where there are now more than 30,000 units in operation. The model is simple, with new release movies offered for a small hire charge and, according to Original Video, they can make up to £500 a week.Even if you don’t offer DVDs yourself, this is a great time of year to inspire customers to make a big night in of their film evening with an innovative aisle-end or window display – and don’t forget to lay out the snacks, as nibbles such as popcorn, crisps and sweets are a key ingredient.To get you started, we’ve lined up some classic film choices – and suggestions to drink with them.■ Casablanca: Humphrey Bogart’s Rick is a self-confessed drunkard, and in the course of the film plenty of wine, bourbon, brandy and Cognac is consumed. But when you watch Casablanca, why not have a Champagne toast along with Rick and his lover, Ilsa, played by Ingrid Bergman. They’ll always have Paris.

Anita Elberse (2013) Blockbusters - must-read book?

"Because people are inherently social," the Harvard business professor Anita Elberse points out, "they generally find value in reading the same books and watching the same television shows and movies that others do." What's more, and equally understandably: "People have a taste for winners: if, say, a book is popular and has been widely discussed in the media, consumers have more reason to read it." [from Guardian review]

Scroll down for sample quotes and review snippets, such as Bloomberg's fairly critical view

Use the look inside feature for a preview

I'd recommend at the very least sampling this, a book that basically argues that the tentpole strategy (or blockbuster as she terms it) is vital for any and all modern media/entertainment giants. Her examples take in music, film and other media, but also widen out to incorporate 'entertainment' industries such as football, looking at the examples of Barcelona and Real Madrid, and the latter's 'galacticos' strategy.

She very convincingly picks out examples of major conglomerates that have tried more austere, penny-pinching approaches ... and shows, with forensic financial detail, how disastrous this invariably proved.

Interesting that she's not simply referring to production, but also as much about distribution, and the marketing muscle and capacity to make very widely available and prominently placed a given release, Lady Gaga being one such example she dissects.

You can preview some samples by using Amazon's 'look inside' feature, or GoogleBooks (add keywords related to cinema, music or whichever industry you're most interested in to get the most relevant sections), and its for sale as a Kindle book too.

Here's a few snippets from various articles/reviews:

"Because people are inherently social," the Harvard business professor Anita Elberse points out, "they generally find value in reading the same books and watching the same television shows and movies that others do." What's more, and equally understandably: "People have a taste for winners: if, say, a book is popular and has been widely discussed in the media, consumers have more reason to read it." [Guardian review]

Fanbase not Audience the future say YouTube

Various web 2.0 theorists have signified the end of the old analogue/early digital producer-consumer paradigm through such bold statements as "the former audience" ... now one YouTube's top honchos says we should abandon the very term audience, with its links to scheduled programming, and think in fanbase terms instead...
Simon Cowell and Disney are picked out as exemplars of the new more copyright-flexible order, in which UGC is seen as benefitting copyright-holders, not cannibalising their revenue streams.

“An audience tunes in when they're told to, a fanbase chooses when and what to watch,” said Carloss at the MIPTV television industry conference in Cannes. “An audience changes the channel when their show is over. A fanbase shares, it comments, it curates, it creates.”
...
He also praised Simon Cowell’s You Generation brand, a YouTube-focused global talent show, and Disney for the way it encouraged fans of its film Frozen to post their own cover versions of its songs on YouTube. One by musician Alex Boyé has been watched more than 30m times.
“The studio could have very easily issued copyright claims against this video and any others and taken them down, but they made a different choice: a fan-friendly choice. They chose to let those videos stay,” said Carloss, suggesting that the buzz around Frozen on YouTube contributed to its strong performance at the box office.
“Creators everywhere can make the choice Disney did. Allow fans to pay tribute, and you will see the incredible benefits of their passion.”

A lot of this closely echoes some of the arguments put forward by Anita Elberse (a Harvard economist) in her fascinating (a highly recommended read) book Blockbusters, published in December 2013.